Surprise rise in industrial profits
Print Edition
CHINA’S industrial companies posted a surprising rise in net profits year on year in the first two months of the year, according to data released yesterday by the National Bureau of Statistics.
Their net earnings gained 4.8 percent from a year earlier in January and February combined to 780.7 billion yuan (US$119.6 billion). The profit gain contrasted with the 4.7-percent drop in December last year and the 2.3-percent decline in 2015.
He Ping, a researcher at the bureau, said the industrial companies profited from better sales and a slower drop in producer prices.
“It was much better than expected,” He said. “Revenues of industrial companies expanded 1 percent in the first two months thanks to improved demand, while the drop in producer prices also narrowed. Together, they have a positive impact on industrial profits.”
He also noted net earnings grew during the period as the companies benefited from a low comparative base.
The Producer Price Index, the factory-gate gauge of inflation, fell 5.1 percent in the two-month period, but better than the loss of 5.9 percent in December and last year’s overall drop of 5.2 percent.
Of the 41 industries being tracked, 28 said their net earnings grew while 12 reported a loss and one said profit was flat.
Profits of state-owned manufacturers slumped 14.5 percent year on year to 117.1 billion yuan in the first two months. Private companies posted a higher net profit of 310.3 billion yuan, up 7.5 percent from a year earlier. Foreign-invested companies and those from Hong Kong, Macau and Taiwan saw their profit edging up 5.6 percent to 192.5 billion yuan.
China has to deal with increasing downward pressure due to sluggish global demand and its own imbedded problems as it restructures its economy, Premier Li Keqiang said earlier this month.
“But there are more hopes than difficulties and as long as the country sticks to the course of reform and opening up, the country is confident to prevent the so-called hard landing,” Li said.
China has set a growth goal of 6.5-7 percent for this year.
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